Report urges cities to stop signing Airbnb’s ‘secret’ tax agreements

In defending itself from its harshest critics, Airbnb often falls back on its tax policy.

When hotels complain Airbnb doesn’t follow industry regulations, or cities protest that Airbnb is flouting its rules and displacing its long-term residents, the startup essentially says: ‘Just look at how much money we’re giving your city in taxes.’

But a new report — paid for by Airbnb’s enemies in the American Hotel and Lodging Association — is trying to discredit those tax agreements. In a news release Tuesday, the report’s author, revenue policy and administration consultant Dan Bucks, called them secretive and “deeply flawed,” and claimed they show Airbnb unjustified favoritism by giving the company and its landlords “tax and regulatory handouts” not available to others.

The report looked at Airbnb’s tax agreements with 12 cities, including San Jose. It found the agreements “do not do what normal tax agreements do.” They don’t require Airbnb to disclose information relevent to its tax status, and they keep the identities of their landlords secret, Bucks wrote. He said cities should stop signing them.

“The agreements do not even guarantee that Airbnb’s lodging tax payments will be full and accurate,” Bucks wrote in a statement. “Airbnb gets to keep its books and records secret from tax agencies and provide only anonymous data for tax auditors—data that could be fact or fiction. These provisions insulate Airbnb from accountability for the taxes they pay.”

Airbnb fired back at the report.

“Read our lips: we want to pay taxes and in virtually every case,” a spokesman wrote in a statement emailed to SiliconBeat, “we’re the only home sharing company that’s putting our money where our mouth is. We are proud to have paid more than $175 million to over 220 communities and we want to do more. We have supported legislation that would require Airbnb to collect taxes, but the big hotels have blocked it. We understand that big hotels will say and do anything to keep price gouging their customers, but we’re going to focus on supporting our hosts and the communities they call home.”

Airbnb collects and remits taxes on its rentals in cities including San Jose, Santa Clara, Palo Alto, San Francisco and Oakland. When a city signs a “voluntary collection agreement” with Airbnb, the startup takes a portion of each guests’ booking fee as a tax and passes that money on to the city. Airbnb says that setup is a win-win because it means its landlords don’t have to fill out burdensome tax forms, and cities don’t have to bother with tax collection and enforcement.

But not all city leaders are thrilled with their agreements. In Oakland, which held a public hearing earlier this year as the first step in passing new home-sharing rules, Councilman Dan Kalb has criticized his city’s policy. He says Airbnb won’t share the addresses of its landlords, so Oakland can’t collect the taxes itself.

“There’s some money coming in,” Kalb said in an interview in January, “and I think we’re being shortchanged.”